Mortgage rate trends: Mortgage rates rise

Mortgage rates this week

• The average rate on a 30-year fixed mortgage is up to 6.83% this week
• The average rate on a 15-year fixed mortgage is up to 6.03% this week

30-year fixed-rate mortgages

The average 30-year fixed mortgage rate increased to 6.83% this week, up from an average of 6.62% last week. A year ago at this time, the 30-year rate averaged 7.10%.

15-year fixed-rate mortgages

The average 15-year mortgage rate increased to 6.03% this week, up from an average of 5.82% last week. This time a year ago, the 15-year fixed rate averaged 6.39%.

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Mortgage rate trends

See how mortgage rates have changed over the last three months. The average 30-year mortgage rate hit a high of 7.04% the week of January 16, while the average 15-year mortgage rate topped out at 6.27%, the same week.

What’s behind current mortgage rate trends?

Inflation: The current inflation rate is 3.0%, compared to 2.9% last month. Mortgage lenders often demand higher interest rates to compensate for the eroding purchasing power of money due to inflation.

Federal funds rate: The federal funds rate is set by central bank officials, and it’s the interest rate that banks charge one another for borrowing money. Central banks adjust key interest rates to control inflation or stimulate the economy, and mortgage rates can follow suit. The current federal funds rate is at 4.25% to 4.50%.

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How mortgage rates affect your monthly payments

Say you’re buying a $500,000 property, have a 10% down payment and lock in a 30-year fixed mortgage at today’s average rate of 6.83%. Using a mortgage calculator, your monthly mortgage payment would be $3,321 a month, not including property taxes and insurance.

When buying a home, keep in mind that most lenders want you to keep your housing expenses at or under 30% of your gross income. Based on your income and expenses, use this calculator to find out how much home you could afford at today’s mortgage rates.

Mortgage application demand decreases

Demand for mortgages decreased 8.5% this week from one week earlier, according to the Mortgage Bankers Association (MBA).

Meanwhile, the Refinance Index decreased 12% from the previous week, and was 68% higher than the same week one year ago.

“Motgage rates moved 20 basis points higher last week, abruptly slowing the pace of mortgage application activity with refinance volume dropping 12 percent and purchase volume falling 5 percent for the week. Purchase volume remains almost 13 percent above last year’s level, but economic uncertainty and the volatility in rates is likely to make at least some prospective buyers more hesitant to move forward with a purchase,” said Mike Fratantoni," MBA’s SVP and Chief Economist.

“One notable change last week was the full percentage point increase in the ARM share. Given the jump in rates, more borrowers are opting for the lower initial rates that come with an ARM, with initial fixed rates closer to 6 percent in our survey last week. The ARM share at 9.6 percent was the highest since November 2023, and this reflects the share of units. On a dollar basis, almost a quarter of the application volume last week was for ARMs, as borrowers with larger loans are even more likely to opt for an ARM.”

Should you buy a home at the current mortgage rates?

With the current 30-year fixed mortgage rate at 6.83%, you might wonder if now is the right time to buy a home. To help you make the best decision, ask yourself a few questions.

Am I financially stable? Reflect on your current financial situation, including your income, job stability, and overall financial health. Use a mortgage income calculator to determine what monthly mortgage payment you could comfortably afford. Remember to factor in property taxes, insurance and maintenance costs.

Where do I see myself in 5, 10 years? Imagine yourself five, 10, 15 years from now. What does your career look like? Are you in the same city/state? Thinking about your long-term plans can help you determine if buying a home at today’s mortgage rates is a good idea or not.

How’s my credit score? Your credit score plays a significant role in the interest rate you'll be offered. If it’s on the low end, you may want to focus on boosting your score. With a higher credit score, you can qualify for the best mortgage rates available.